UK banks could face more problems in 2011

A leading think tank has warned that UK banks could require another bail-out in 2011.

In a report entitled “Where did our money go?” the New Economics Foundation states that the escalating levels of borrowing may force the banks to again request aid from the state.

According to the report the banks are currently borrowing £12 billion every month, and with the imminent end of government backed funding this figure is set to rise up to £25 billion from next month.

Tony Greenham of the New Economics Foundation said: “The public have already paid for the failure of the banks twice, first by bailing them out, and then by suffering a program of drastic cuts to public services. We need urgent reform of the banking system to ensure the bailed-out banks are not allowed to repeat their failures.”

The report also suggested that banks should separate their retail and investment interests, something the Government has already asked Sir John Vickers to investigate.